Chapter Fifty: New classification system for private sector companies from June 1st
A new classification system for companies in the private sector which took effect on Wednesday June 01,2022, was announced by the Ministry of Human Resources and Emiratization (MOHRE).
The new system, which classifies companies into three categories, depends on the extent of companies’ compliance with the law and Wage Protection System, workers’ rights protection and their compliance with the policy of promoting cultural and demographic diversity.
The first category
This will cover companies and establishments that commit to the laws and decisions that regulate the labor market, while fulfilling all required general obligations. They must also meet at least one of the following criteria: raising their Emiratization rate at least three times above the target, cooperating with the ‘Nafis’ program to train at least 500 citizens annually, being a venture owned by a young citizen according to approved standards, or being one of the training and employment canters that support implementing the Workforce Planning Policy by promoting cultural diversity in the UAE.
The second category
This will encompass companies that commit to general standards, laws and regulations, and to the UAE’s policy on promoting cultural and demographic diversity or operating within the targeted sectors and activities determined by the Council of Ministers based on the Minister of Human Resources and Emiratization’s proposal. Companies that do not meet any of these criteria, while complying with the laws and the UAE’s policy on promoting cultural and demographic diversity, will be automatically classified in the second category.
The third category
The third Category will comprise companies that fail to observe the policies, laws and decisions on regulating the labor market or standards that protect labor rights, or companies that do not commit to the policy on promoting cultural and demographic diversity in the UAE’s labor market.
The new system for classifying private sector establishments and companies will enhance their sustainable growth and protect investors and employees’ rights. It also reinforces the leadership of the UAE’s business environment, which has defined many indices related to competitiveness, ease of starting businesses, and the diversified economy’s innovation in terms of infrastructure and organizational structure. The new system sets clear and transparent standards, while motivating companies committed to enriching the UAE’s business environment and enhancing its attractiveness for local and global talents and skills.
The UAE government has also updated the categories for visas and the newly revised list of updated designations is required to process new visas, labor cards, renewals, and amendments. The job designations are grouped into categories and these categories are:
- Skill Category 1 to 2– needs an attested University Degree
- Skill Category 3 to 4– needs an attested Diploma
- Skill Category 5– needs attested Secondary/High School certification
- Skill Category 6 to 9are unskilled, and no certification is required.
If an employee’s monthly wage is less than AED4000, the company will be required to pay workers insurance for unskilled employees, regardless of the skill category of their designation.
The UAE government has fully revised the fees list based on business type and employee category.
Please contact us for more information regarding the new classification system employed by the MOHRE labor classification system
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